Dissipated Marital Assets: What You Need to Know

What can you do if your spouse has dissipated marital assets before or during your divorce, leaving nothing to be divided in the property settlement?

By WomansDivorce
Answers by Brette Sember, J.D. and Timothy McNamara, Financial Expert

Unfortunately, some husbands will go to extreme lengths to guarantee that their wives will get nothing in the divorce. Dissipation of marital assets is a serious issue that can have significant consequences for both spouses. Keep reading to learn what dissipation of marital assets is, common types of dissipation, and what to do if you suspect your spouse is hiding or selling marital assets.

What is dissipation of marital assets?

Dissipation of marital assets refers to the intentional or reckless wasting, hiding, or destruction of marital property by a spouse during the marriage, usually with the aim of depriving the other spouse of their fair share of the marital estate during a divorce settlement.

Common types of dissipation

To make a claim of dissipation, the squandering of marital assets needs to have occurred in anticipation of a divorce or during the marriage if the expenses were for non-marital purposes. Examples of dissipated marital assets can include:

  • Excessive gambling losses
  • Significant money spent on an extramarital affair
  • Intentionally hiding or selling marital assets
  • Significant cash withdrawals
  • Transferring assets to a third party
  • Excessive spending not typical of money normally spent during the marriage
  • Paying off personal debts with marital funds
  • Negligently managing marital assets, such as failing to pay bills on time or making poor investment decisions
  • Misusing joint credit cards or bank accounts

It's important to note that not all financial decisions or expenditures made by a spouse during the marriage would be considered dissipation of marital assets. The key factor is whether the expenditure was made intentionally or recklessly with the aim of depriving the other spouse of their fair share of the property during a divorce settlement. The wasting of marital assets also cannot be condoned by the other spouse.

What are the consequences of dissipation of marital assets?

If it can be proven that a spouse has intentionally dissipated marital assets in anticipation of a divorce, it can impact your divorce settlement. It's important to realize that the amount of dissipated assets has to be substantial enough to make a difference in the division of the marital estate.

If a judge determines that a spouse has willfully dissipated marital assets, the court may award a larger share of the remaining assets to the other spouse in the divorce settlement to compensate for the marital assets that were wasted. The judge may also award more alimony to the innocent spouse to make up for the money wasted.

What can you do if you suspect your spouse is dissipating marital assets?

You should gather as much evidence as possible to support your case. This can include things such as bank statements, credit card statements, retirement and investment account statements, and receipts for purchases or withdrawals. You should also make a list of all other marital assets and property. Be sure to monitor these assets closely throughout the divorce process to ensure that they don't mysteriously disappear.

State laws vary in how the dissipation of marital assets is addressed. If you suspect your spouse may be squandering marital assets, it's important to talk to a divorce attorney to help you understand your rights and protect your assets during the divorce process. This will likely include obtaining a temporary restraining order to prevent either spouse from disposing of or hiding marital assets.

A divorce attorney will also request financial information during the discovery phase of your divorce which can help uncover hidden or dissipated marital assets. And if yours is a high net-worth divorce, it may be a good idea to hire a forensic accountant to help uncover hidden assets and trace spending.

You may also be able to freeze joint accounts to prevent your spouse from accessing and depleting the funds. Be sure to consult with your attorney before you proceed. Another really important thing to realize is that you shouldn't sign any agreements or make any deals with your spouse without first consulting with your attorney.

FAQs about Dissipated Marital Assets

If you're faced with this situation, read the suggestions from our financial advisor and legal expert about your options when a spouse hides assets or sells property before or during divorce.

What if he ruined out finances after we separated?

Kelley Asks: My soon to be ex violated our Protective order by buying a new house and car that were paid for with marital assets. He has ruined our finances and may have taken out a home equity loan on our marital home. Our estate was worth a couple of million and now he claims poverty and wants to represent himself pro se. What recourse do I have?

Timothy Answers: The fact that your husband directly violated a court order is a serious issue that requires legal attention. Do yourself a favor and hire a good attorney right away if you don’t already have one! An attorney may be able to help you get back your share of your marital estate that was squandered by your husband. Unfortunately, this may require you to prepare to go to trial, which could be an extremely expensive endeavor.

You mentioned that your marital estate was worth a couple of million dollars and you are now in financial ruins. I would highly advise you to start gathering your financial documents that show what your marital estate was worth before and after your husband deliberately sold your joint assets for his own benefit. Rather than speculating about where your husband received his loan, you should check the registry of deeds in the county where his home is located. All legal documents – titles, mortgages, quit claim deeds – are matters of public record.

A good attorney can help you sort through all of your legal issues and be an advocate for you and your family’s needs. You might also want to think about hiring a Certified Divorce Financial Analyst or a Forensic Accountant to help you document your marital lifestyle and trace where the funds from the dissipated marital assets went. Since your husband is now claiming poverty, you may also need to document his ability to pay if spousal support will be an option in your divorce settlement.

What are my options to keep the assets safe while I'm gone?

Terri's Question: I think I may be heading for a divorce. I am going to visit a friend out of state and my husband purchased my ticket which is a one way ticket. He is sneaky, so I am getting prepared for the news. I am jobless, penniless and everything in our home is mine. All our furniture was given to us after the death of my mother and most recently my grandma. What are my options to keep the assets safe? I am really at a loss and don't even know where to start or what my rights are, or what his are. Any advice would be appreciated.

Brette's Reply: You need to consult with an attorney. Leaving the home would likely be a very bad idea at this point.

How can I stop him from selling marital property before we divorce?

Rebecca's Question: We acquired land five years ago and paid 2500 down. The land is only in his name, but for the last 5 years I have made the payments. Can he sell or transfer the title prior to our divorce?

Brette's Answer: You have to start a divorce case so the court has jurisdiction, then you ask for an order preventing him from selling during the case.

Is there any way to find out if my husband is hiding assets?

Diane's Question: How do I find out if my husband has been "stashing" money in a hidden account prior to leaving? We were struggling financially and now he seems to have plenty of money even paying 1/2 our debt and rent elsewhere.

Brette's Answer: This would be something you would be able to obtain information about during the discovery phase of a divorce proceeding, or when you complete sworn financial affidavits. You also could try asking him, or going to mediation and discussing it there.

At what point in the divorce will it be discovered he’s hiding money?

Alison's Question: My ex is hiding money. Will he be found out and at what stage?

Brette's Answer: Your attorney will do discovery and that is the point at which everything must be disclosed. If you believe your spouse is hiding money you need to tell you attorney so they can know what to look for. 

What if he says that all the severance pay is gone?

Barbara's Question: When my husband's employer closed the plant, my husband was given his 401K and six months of severance pay ($75,000). Instead of rolling over his 401K and paying expenses with the severance pay he cashed the checks and took the cash to his sister. Now he is saying that it is all gone. My question, has he committed fraud against me?

Brette's Answer: It sounds like he dissipated marital assets or is attempting to hide funds. Either way, the money counts as a marital asset and will be divided in your divorce. Get a lawyer.

What should I do if he's removing items from the marital home?

Estelle's Question: My husband left me and plans to get half of the home value and furnishings. He has been removing items from the home, and is also removing tools which he acquired during the marriage. What can I do to stop this?

Brette's Answer: Items purchased during marriage are marital property. Go back to court and get an order prohibiting him from removing any marital assets. Take photos and make lists of all the contents of the home. This will provide proof of what he has taken. Also, make a note on your calendar for the day you saw him leave with them. Report this to your attorney, so that the items can be itemized and a value assigned. The amount will be subtracted from his share of the marital property.

Will I be able to get the cash back that he took out of the safe?

Gil's Question: We are in the process of divorce. My husband took $85,000.00 cash out of our personal safe, and I have proof that it exists. Can I get this cash back?

Brette's Answer: If the cash is a marital asset, it will be divided in the property division.

Can I sell community assets to make ends meet?

Clara's Question: If the court entered a temporary restraining order to protect assets during the divorce, can the wife sell community assets to assist with care of her children and life expenses during the divorce if she has no income of her own?

Brette's Answer: You would need to get permission from the court to do that if the order covers the assets you want to sell. Even if the court allows you to sell assets, the proceeds are considered a marital asset to be divided in the divorce. You ought to be asking for child and spousal support so that isn't necessary.

What happens if he sells assets before we get a divorce?

Jen's Question: My husband has a business that he has said he will give to someone before he will let me have part of it. What am I entitled to if he sells or signs it over to someone before we get a divorce?

Brette's Answer: It's a marital asset and he'll be held responsible for reimbursing you if he gives it away. It sounds like you should get an attorney.

Will I get reimbursed if he sells stuff before the divorce is over?

Question: If he were to sell anything before the divorce is finalized, will I get anything out of it?

Brette's Answer: Everything either of you bought or earned during the marriage is a marital asset and will be considered as part of the property settlement. If these items are sold, the value of that item is included in what has to be divided.

What can be done if he sold the house while we were separated?

E's Question: We have been separated for 13 months. I just found out that my ex sold the house (probably to a friend) for less than $100000. He probably got the rest in cash. What can be done about this when I file for divorce?

Brette Answers: If this was marital property, he will be held accountable for the sale in the property division. He'll owe you your portion of it.

Am I entitled to property his friend purchased for him before we divorced?

Kay's Question: I just found out my ex-husband had a friend buy a property for him for $135,000 while we were in divorce proceedings. The friend just now transferred the property to his revocable trust for 1 dollar. Do I have any right to the property? I assume he lent his friend the money to buy the property.

Brette's Answer: You should contact your attorney. It sounds like it may be marital property. 

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